You’re standing on a dock at the busy Port of Newark as large numbers of union dockworkers load a ship. Ocean freight cargo in bags, barrels, crates, and even loose items are being loaded onto a ship. A large sack next to you is open. Looks like a few items have been taken as it waits to be loaded with all the other loose items going on the ship.

 

Graphic from https://anlcontainers.com.au/types-of-shipping-containers/

That’s how container shipping was like 70 years ago. Hard to believe that the international shipping industry is responsible for the carriage of around 90% of world trade nowadays. To put that into perspective, global seaborne trade is valued at around 18 trillion USD in 2017 and has risen tremendously from 1950 until today.

In this article we are going to look at the history of shipping containers starting with what we used before them, followed by who invented the shipping container as we know it today and finally, what led to the impact containers have had on globalization and the world as we know it today.

Before shipping containers existed 

Mankind has voyaged across the seas taking food, cotton, treasure and good for centuries. Huge empires used “sea freight”, just think of the Egyptians, Greeks, Romans and more recently the British!

How did they transport their goods around the world? Although they already shipped them, it was a slow and difficult process without any standardization. Goods would be stored at a port warehouse until a boat was available. Goods would typically be loaded into sacks, bales, crates and barrels and would be loaded by hand onto the ship once the vessel arrived.

This process was known as break bulk cargo and was very labor intensive as you can imagine … a typical ship would have around 200 000 pieces of cargo on board. The lack of standardization was becoming a real issue towards the early 1900’s, especially considering how prevalent trains had now become.

It took more than one week to unload and re-load larger ships because transferring cargo from ships to trains was extremely slow. This was the only way to transport goods for centuries until Malcom McLean in the United States changed the way container shipping works forever.

Malcom McLean invented the modern shipping container

A whole industry needed standards: Ships, trains, trucks and port terminals. As you can image, it would require a lot of work and persuasion to make that possible – Malcom McLean tried and thereby fundamentally changed the container shipping industry.

McLean finished school in 1931 and worked several years to save up enough money to purchase a second-hand truck to launch his own company in 1934. “There has to be a better way,” said McLean when it took his company hours on hours to deliver cotton bales from North Carolina in 1937. McLean’s company grew to almost 2000 trucks and terminals until 1950 although handling cargo was super expensive back then: longshoremen hand-loading a ship cost $5.86 a ton, compared to only 16 cents a ton nowadays.

He had the idea to of creating a standardly sized trailer which could be loaded onto boats in the volume of not only 1 or 2, like with his trucks, but in hundreds. It was not just an idea, McLean went all in! In 1955 he sold his trucking business and took out a bank loan of $42 million to purchase Pan Atlantic Steamship, an already established shipping company with docking rights in many of the eastern port cities. After testing variations of the container, McLean settled on a primitive form of what we know as the shipping container today.

McLean’s final piece was designing a ship which could carry the containers he built, after he had his standardized, stackable and easy to load containers. The very first containership, the Ideal X left New Jersey, heading for Houston in 1956 is 25 percent cheaper than conventional cargo – it required only two groups of dockworkers to unload and load the ship.

The early days of container shipping

Although that was a huge step towards we know as container shipping, it took a mere 10 years for the first every international container ship voyage. In 1966 the first ship sailed from the US to the Netherlands with 235 containers on board. What else had to happen before container shipping really took off?

Ports had to follow the development to support container ships. The very first quayside container crane, for example, was developed in the 60s to fasten up the loading and unloading process of containers. As a result of ISO regulations in 1970, the now famous 20 foot and 40-foot shipping containers were introduced as a standard.

One last important part of the development happened in the 1970s as dockside workers were no longer required, which caused outrage with the dockside unions. Many union workers went on strike disrupting the shipping industry and its rapid expansion. However, due to the huge financial savings of containerized shipping, these union workers were paid severance agreements and shipping containers’ growth sky-rocketed.

 

10 facts about Container shipping today 

xChange compared SOC and COC containers with all its advantages and disadvantages

– The cost to ship cargo has dropped more than 90%.

– Approximately 97% of all shipping containers are manufactured in China.

– Around 90% of every purchased item has been shipped inside of a container.

– There are more than 17 million shipping containers in the world, which make over 200 million trips per year.

– Approximately 675 shipping containers are lost at sea each year (read more)

– A sweater can now travel 3,000 miles for 2.5 cents by sea.

– There are more than 6,000 container vessels currently in service.

– If shipping containers are taken care of with regular maintenance, they can last for a total of 20 years, according to Container Auction.

– Shanghai is the busiest port in the world, handling more than 37 million TEU containers in 2017.

– The largest shipping in the world, OOCL Hong Kong, has a TEU of 21413

 

Why are so many containers shipped empty? 

While there are many different challenges and opportunities, the amount of empty moving boxes is definitely avoidable in 2018. Of more than 50 million moved boxes, on out of three ins being moved empty. This causes not only a huge amount of approximately  $20B a year according to the BCG Shipping Benchmark but also 1,9 kg CO2-emission per container shipped from China to Europe.

We at xChange are motivated to fight empty containers and pollution. On xChange you can easily use or supply containers on a one-way basis. More than 200 companies use xChange as their go-to-place for shipper-owned-containers and benefit from additional services including tracking, process support and insurance. We are a 100% sure that Malcom McLean would support asset sharing in the container industry to increase efficiency – why would want containers to be moved empty?